November 2022, Virtual
21 November 2022, Hilton London Metropole
BBT’s annual guide to the UK’s leading travel management companies provides a snapshot of the industry. Read the full listing here
In 2018, we saw significant changes in the leading 50 TMCs due to consolidation. The biggest deal was American Express Global Business Travel acquiring HRG, allowing it to leapfrog the former number one, CWT.
Other TMCs were in the mood to buy, too – notably Gray Dawes Group, which was ranked 21st in 2017. It bought 35th placed Giles Travel and has now jumped to number 16. Two further acquisitions that followed the period under scrutiny will mean it is likely to jump up again next year.
The TMC sector relies on the health of the UK economy. In 2018, the UK economy grew by 1.4 per cent, its slowest since 2012 and down from 1.7 per cent in 2017. Growth has been dragged down by Brexit concerns, but also by a fall in factory output, particularly from car manufacturers and steelmakers.
Despite that, 2018 was a good year for aviation. IATA reported that demand (revenue passenger kilometres) for 2018 rose by 5.3 per cent compared to 2017 on a global basis. Planes were full, too – load factor climbed to a record high of 81.9 per cent, thus boosting corporate travel spend.
What the ranking reveals
One thing to emerge in 2018 is New Distribution Capability. TMCs have been concerned about IATA’s NDC in previous years. Now the standard has begun to be adopted by more airlines and technology providers, it is starting to appear in the real world of business travel transactions. Many TMCs have noted that they are offering NDC content for the first time in 2018 as a result.
Meanwhile, if there is one word that crops up more than any other except “technology” in how TMCs self-describe, it is “service”. There is a realisation among respondents of what differentiates them from a business traveller booking direct on a supplier website. Companies are increasingly recognising business travellers need to be served well to work to their best capabilities. Although many TMCs are worried about low margins, it is the delivery of personalised service for which they can rightly charge a premium.
Our snapshot survey
Each year, we survey TMCs for their views on the state of the market and the year ahead.
In general, TMCs feel less positive about 2019 than 2018, perhaps due to uncertainty over Brexit. More than half of TMCs expected to enjoy growth of more than 10 per cent in 2018 but that has now dropped to 44 per cent. However, none said they were expecting sales to fall. (Note that this survey is anonymised to encourage truthful responses.)
When it comes to how growth is going to emerge, two-thirds of TMCs say from new customers. However, given the limited number of managed travel programmes, this seems unlikely. Many are hoping clients will spend more on extra products and services.
A significant number of TMCs said they were looking at winning new business in areas outside transient business travel, such as executive leisure and meetings and events.
We asked our respondents on what fee basis they charged clients. Every TMC in our survey charges some clients on a transaction fee basis; the proportion of all transactions for all TMCs who answered this question stands at 90.5 per cent, slightly down on last year. Half of respondents said they were remunerated on a management fee on some business, down from three-quarters of TMCs which said they worked in this way in 2016.
However, a growing number of TMCs are making money from consultancy fees.
The average TMC
The top 50 TMCs in our 2018 survey have combined business travel sales of £11 billion, up from £10.3 billion in 2017. This equates to an average of £220.7m, up 6.5 per cent from £207.3m last year.
The average TMC handled 544,904 transactions, compared with 484,189 in 2017, at an average transaction value of £406.63. Around 32 per cent of those transactions were online. Note that figures do not add up to full sales figures because not all TMCs provided the relevant information.
The average TMC employed 292 full-time equivalent staff, an increase of 37 on 2017.
Each year, we ask our TMCs to quantify their new business signed for the past 12 months. This chart looks at who has grown the fastest in terms of total new business signed as well as relative to total sales (the fast track). It is important to note that new business signed in a year may not start trading until the following year so any comparisons should be made with caution. (Note that some TMCs also do not supply their new business figure.)
Corporate Travel Management (CTM) again enjoyed a healthy year. The company has continued on its acquisition streak, although beyond the UK following the Redfern purchase. It is highly geared for growth and its latest strategy seeks organic growth of 10 per cent per annum.
The two major players in the not-for-profit and charity sectors – Key Travel and Diversity Travel – have both enjoyed a good year. They have both won additional business for their specialised offerings for the sector.
The annual BBTLeading 50 Travel Management Companies supplement is compiled from information supplied from Britain’s TMCs during a two-month period in February and March each year. The information is gathered through a comprehensive questionnaire that BBT reviews each year for relevance.
The survey includes questions on financial performance and transactions, and we are very grateful to TMCs for providing the information that is vital for creating this ranking table.
Some TMCs are unwilling to supply answers to every question for this supplement, including the key financial statistics that we use to rank TMCs. A few years ago we took the decision to include all of the major TMCs in this ranking, regardless of whether they supplied the necessary information. This means that for a small handful of TMCs, we have to make estimates of certain key figures, notably the gross sales figure, rather like the compilers of the Sunday Times Rich List do. Where we have estimated figures, these are clearly marked.
We make these estimates as rigorous as possible. This involves looking at Companies House accounts, analysing air spend figures from IATA’s Billing and Settlement Plan, and taking note of public statements about changes in client spend and turnover. We believe that the figures we use reflect the state of the market.
BBT would also like to mention the TMCs that fell just outside the top 50 this year. Companies vying for a place in the 2020 ranking are Sunways Business Travel (£12m), Omega Business Travel (£11.3m), ACE Travel Management (£7.8m) and Flightline Travel Management (£7.2m).